Full report-ASX/Media Release – 31 October 2018CIL Tests confirm...

Full report-ASX/Media Release – 31 October 2018

CIL Tests confirm outstanding high-grade results for tailings and Mestre zone Gekko optimisation work carried out by Gell Street Mining.

CIL Tests confirm outstanding high-grade results for tailings and Mestre zoneGekko optimisation work carried out by Gell Street Mining

• An independent third party ball mill & CIL test processed 8.94t of our underground Mestreore and 22.11t of tailings and returned an average grade of 28.75 g/t Au and 6.143 g/t Aurespectively.

• The extremely high grade results go a long way to show Cascavel is a potentially rich andlarge gold system which has so far not performed to its true potential.

• When we ran the same test through our own gravity only Hammer Mill 3 and Gekko circuitusing similar material from Mestre and tailings, we recovered only 8.75 g/t Au and 2.11 g/tAu respectively – pointing to gold recoveries of less than 40%.

• The 6.143 g/t Au tailings result from CIL suggests the mill has more than likely been losinga lot of gold over the last 2 years.

In this report we detail 300 historical unpublished tailingresults between July 2016 and March 2017 that are as high as 514 g/t.

• The ongoing frustration of not achieving our production milestones this year and thestriking difference between the third party CIL results and our own, prompted us to do thefollowing :

A) Undertake extensive enquiries within a 300km radius to locate a CIL Plant that isprepared to process our ore and tailings.

These discussions are ongoing.

B) Carry out immediate short term improvements to our mill by appointing Gell StreetMining who have been on site over the last two weeks to optimise the plant.

C) Fast track all our licensing to build our own CIL Plant at Rio do Ouro (Sertao) whereOrinoco has had exploration success and where Troy previously operated a CILPlant and mined over 250,000 ounces of gold.

• A principal of Gell Street Mining, Mr Peter Richards was a member of the Gekkocommissioning team in July 2016.

• During his visit, the gravity mill was optimised with a particular focus on the Inline PressureJig – IPJ plus various small ‘tune up’ adjustments focused on recovering the fine goldcomponent of our tailings and ores.

• A qualified metallurgist is being sourced to join the Cascavel team to ensure and monitorthe processing plant to ensure optimisation is maintained.

• For the quarter ending 30th September we produced ounces 316 ounces partly due to theongoing substantial losses into the tailings.

Our quarter was also severely affected by alack of reliable equipment underground in August and September which we are addressingwith the purchase of a third Toro that should arrive next week.

• Effective Monday 29th of October, we have moved from one to two shifts per day with aparticular focus on processing up to 3,000 tonnes of tailings each month in addition to ourhigh grade ore.

We hope the adjustments to the mill and the increased volume of feed fromtailings will allow us to reach our first production milestone in the near term.

• Overall, the CIL tests confirm in our mind that Cascavel is extremely high grade and theapproximate 40,000t of dry stacked tails could contain a significant quantity of gold.

 258 grams of gold recovered from3rd party ball mill & CIL processing of 8.94t ofCascavel u/g feed averaging 28.75 g/t

Orinoco Gold Limited (ASX: OGX) (Orinoco or the Company) is pleased to announce the results from therecent Carbon-in-leach (CIL) testing conducted on both the tailings and underground ore.

The two samples of underground ore and tailings responded extremely well to third party cyanidation usingstandard conditions for the regional mineralized material.

Our third-party miller noted that a highpercentage of the gold is extremely fine (talc).

This may in part explain why our current mill configurationprior to Gell Street Mining’s work was not capturing this fine gold in the process.Underground Ore Tests

• 8.94t of underground ore through the third-party mill & CIL recovered 257.1 grams of golddore at an average grade of 28.75 g/t and a very good recovery of 98.81%.

• However, the same apples to apples test from 10.00t of underground ore recovered only85.7 grams of gold dore from our gravity only mill at an average grade of 8.57 g/t.

• It seems that in the migration from the smaller Hammer Mills 1 & 2 that gave us such goodresults earlier in the year with our underground coarser ores to the much larger HammerMill 3 (which then feeds into the Gekko mill) that has fed on the finer Mestre ores we lostthe same ability to achieve high gold recoveries that we previously reported1,2,3,4,5.

A bulk sample of 8.94 wet tonnes was taken from the ROM high-grade stockpile consisting of ore fromMestre levels 5 & 6 and was sent to a third-party plant for testing.

The sample was diluted ore and wasnot selectively mined.

The overall gravity plus cyanide gold recovery was accordingly very high.

Owing tothe size of the test all the ROM material was treated with cyanide.

The test was conducted in two phases, first it was processed through gravity circuit and secondly allmaterial (except any nuggets recovered) as processed using a ball mill and CIL.

Owing to the sample sizeno cyclone used during these the tests.CIL Test 1 on Mestre level 6 ore : GravityStage one of the tests included crushing the ore through both primary and secondary Jaw crushers to<30mm and then crushed to <8mm in a short head cone crusher.

The cone crusher discharge is thenconveyed over a static shallow gold trap which was manually sorted after the material had passed over it.

The material then passed over a single deck screen with apertures of 1.5mm. The >1.5mm material wasthen fed into a hammer mill with grid apertures set at 1.5mm.

The hammer mill discharge flows into aKnelson MD7.5 batch centrifugal concentrator, the floats from the concentrator were then stored in a silofor secondary testing.

Concentrates from the Knelson concentrator were processed over a Wilfley table,all middlings and floats were stored in large buckets.

 126 grams of gold recovered from 3rdparty ball mill & CIL processing of 22.11t ofCascavel 2016 tailings averaging 6.143 g/t3

The concentrates were panned, and the gold extracted.

The circuit was then thoroughly cleaned with highpressure water hoses.

The gravity processing produced recoveries of 68.34% when the ore was milled to<1.5mm. Four nuggets of 1.31g, 2.76g, 4.26g and 8.02g were recovered from an inline trap which issituated prior to the sizing screen.

CIL Test 2 on Mestre level 6 ore: Ball mill and CILAll of the material with the exception of the nuggets was then re-processed through a ball mill for furthergrinding and ground to P80 <300 microns 0.30mm.

The ball mill discharge was then fed over a vibratingscreen in a closed circuit with 1mm apertures and pumped to the Knelson concentrator.

The ball mill wasthen emptied and cleaned.

Concentrates from the Knelson MD7.5 were processed over a wiflry table allmiddling’s and floats were stored in large buckets.

The concentrates were panned, and the gold extracted and attained recoveries of 59.21%.

The circuit wasthen thoroughly cleaned with high pressure water hoses.

All of the <0.30mm was then processed through a 5tph CIL test plant for a residence time of 18hrs,

Cyanideconsumption used a relatively low 0.7 kg/t. Loaded carbon was pumped from the CIL circuit to the loadedcarbon screen, above the acid wash column.

Slurry was washed from the carbon, which was fed by gravityto the acid wash column.

Carbon was continuously pumped to the loaded carbon screen until the acidwash column reached capacity. A 3% w/v nitric acid solution was circulated though the acid wash columnto help clean the carbon before elution.

Waste was collected in basket filters. On completion of the acidwash, raw water was passed through the carbon to rinse any remaining acid solution. The loaded carbonwas transferred using water to the elution column.

The acid wash solution was recycled five times, eachtime the solution was topped up with fresh acid.

Spent acid was pumped to the tailing’s hopper for disposal.

Cyanide and sodium hydroxide were combined and was pumped through the elution column (containingloaded carbon) in a closed circuit with a series of heaters and heat exchangers reaching a strip solutiontemperature of 130º C.

A volume of solution the equivalent of six carbon bed volumes was pumped throughthe elution column and transferred to the pregnant solution tank.

Once eluted, the barren carbon wastransferred from the elution column to the carbon regeneration circuit.

The elution was completed over aperiod of 24 hours with the use of insoluble carbon anodes and returned an overall recovered grade of98.81% for a total of 257.10g Dore or 28.75g/t Au (Figure 1).

 Third party Ball Mill & CIL used for testingCascavel ore and tailings in August and September4Tailings Tests

• 22.11t of randomly dug Cascavel tailings treated at a third-party mill & CIL recovered 126.46grams of gold dore at an average grade of 6.143 g/t Au, and recovery of 93.11%.

• However, 24.00t of tailings dug next to the same sample recovered only 50.64 grams of golddore from our gravity only plant with an average grade of 2.11 g/t.

• 300 individual tailing results analysed by Metago and ALS between the 18th of July 2016 and22nd of March 2017 which have never been published before showed tailings as high as 514g/t at an average of 13.3 g/t.

This may be a nugget effect but the number of these high graderesults is interesting and may help to explain why our randomly taken CIL test returned aresult of 6.143 from the first test and could suggest future tailings could be higher.

• The results are also is in line with our earlier announced 5 x 1 tonne random samples takenfrom Tailings 1 and reported in ‘Orinoco Confirms Outstanding Grades of Gold in Tailings’on date 31 January 2018 through our Hammer Mill 2 that averaged 4.75 g/t, 9.72 g/t, 9.86 g/t,10.14 g/t and 11.90 g/t and is further confirmation that our tailings are extremely high gradeand a key focus for our mill now that it has been re-optimised.

• Focus on processing up to 3,000 tonnes of tailings each month going forward with our reoptimisedmill in addition to our high grade ores.

On 29 September 2018, a sample of 22.11 tonnes of tailings that were previously processed through theCascavel gravity plant and discharged in 2016 were sent to the third party for CIL processing.

The samplewas directly fed into the ball mill and ground to a size of P80 <300 microns 0.30mm.

The ball mill was thenthoroughly cleaned, and all the material was pumped directly to the tanks for CIL processing.

It must benoted that these tailings were not processed via any gravity process at the third-party mill.

The same CILprocessing parameters were used as per the cyanide test for the ROM ore described above.

A recoveryof 93.11% was attained for a total of 126.46g Dore or 6.143g/t (Figure 2).

However, when we then performed the same apples to apples test on a similar sample of 24 tonnes oftailings dug next to the same CIL sample described above, our gravity circuit recovered only 50.64 gramsof gold dore with an average grade of only 2.11 g/t.

This clearly illustrates that the circuit (prior to GellstreetMinings work) was not capturing as much as two thirds of the gold in the tails assuming a similar grade ofaround 6 g/t.

We think the success of the Hammer Mill 2 results on 31 January 2018 may be a functionthat those tails did not go through the larger gravity circuit (Hammer Mill 3 + Gekko) and were ratherconfined to the smaller hammer mill. Getting success in the gravity circuit configuration is key for us tountap the large potential gold that sits in the 40,000 tonnes of tailings at Cascavel.

Effective Monday the29th of October we are now running our mill on 2 shifts with a particular focus on batch processing ourtailings separately to our high grade underground ore. We hope to process as much as 3,000 tonnes oftailings each month going forward.

Historical Tailing resultsThe 6.143 g/t CIL result for our tails reported today is in line with our earlier announced 5 x 1 tonne randomsamples taken from Tailings 1 and reported in ‘Orinoco Confirms Outstanding Grades of Gold in Tailings’on date 31 January 2018 (and ‘Re-release of Orinoco Outstanding Grades of Gold in Tailings’ on 5February 2018) through our Hammer Mill 2 that averaged 4.75 g/t, 9.72 g/t, 9.86 g/t, 10.14 g/t and 11.90g/t and is further confirmation that our tailings are extremely high grade.

The variability of grades is afunction of the different locations that the samples were taken from given tails are not homogenous ingrade and completely random.

During the commissioning of the mill between July and September 2016, previous management sentnumerous tailing assays to Metago laboratory. These are detailed in Appendix 1 with some 300 testsoverall between July 2016 and March 2017.

Some of the highest grading tailing results occurred only oneweek before an important gold pour in early October 2016.

These results included tailing grades as highas 278 g/t, 324 g/t, 388 g/t, 406 g/t and 514 g/t.

These results may have been affected by the nuggetaffect but the fact that they occurred so close to what was a disappointing gold pour at the time is interestingand something we had not been aware of.

On the 21st October 2016 in Operations and Corporate Update5Figure 5. 24t tailings comparison sample hole forOrinoco plant processingmanagement at the time announced ‘With bullion shipments well below expectations, the board andmanagement have determined that it is in the best interests of all stakeholders to temporarily suspendoperations, stand down non-essential staff and contractors while a full technical review is undertaken andthe issues resolved.’ Management went on to say ‘

The company and CRH have agreed …. to provide fora maximum period of 300 days in which to restart operations.’ In hindsight, we think this may not havebeen necessary if the reported high grade tailing results were more closely considered and if a specialisthad returned to site when these tailings were beginning to show.

At the time, CRH and Orinoco decidedto bring in independent third-party experts and idle the mill.

Nevertheless, that is history now and our onlyfocus is to achieve our milestones.

We would note that such high grades in the tailings may not just be anugget effect.

Such headline grades are not unusual for Cascavel.

As we reported on the 3rd of September2018 in High Grade panel samples at Cascavel’s Mestre Level 6 grading up to 1,443 g/t Au our best assaysincluded 993.20 g/t, 1204.01 g/t, 1291.74 g/t, 1,442.61 g/t and 1,999.95 g/t.

Although our productionnumbers have not proven it this year so far, Cascavel in our view has the potential to be one of the highergrading mines in the industry.

Those tailings results detailed in Appendix 1 are further proof of that.

Whilst these samples cannot be considered representative of the entire tailings stockpile inventory of40,000 tonnes, the high grades recovered from the CIL test are encouraging and support the data providedin Appendix 1.Figure 4. 22.11t tailings sample hole for the CIL testing6Figure 6. Tailings sample transported to third party mill Figure 7.

Tailings Stockpile 1 at Cascavel (SP 2 in background)Figure 8. Cascavel in house Assay Lab Figure 9. 85.7 grams of gold recovered from 10tof underground ore through our gravity plant.

Gekko Mill Optimisation led by Gell Street Mining

• During Gell Street’s time on site over the last 2 weeks, Mr Richards identified 5 areas ofoptimisation that appear not to have been carried out in the last 2 years.

• Of particular focus was the Inline Pressure Jig - IPJ, where the jig was re-ragged with leadonly balls.

Up until now the jig was a mix of steel and lead balls.

• Our target is to achieve normalised 75-80% recovery through gravity on our blended oresand reprocessed tailings. 7

• To achieve up to 95% recovery a regrind ball mill and flash floatation circuit is recommendedby Gell Street Mining for a cost of A$200,000 - $300,000.

We received similar third partyadvice from Mr Rob Riggir also of Innovative Metallurgical Designs and Management, priorto Gell Street Mining’s visit.

• CIL treatment is currently not an option for Cascavel given we don’t have a license available.

We expect a CIL license for Rio do Ouro (formerly named Sertao) by the end of January 2019which is a potential option to consider if the recoveries are not satisfactory going forward.

We hope the visit of Gell Street Mining to site and the optimising of the gravity mill represents an importantturning point for Orinoco Gold to achieve its production milestones in the near term.

The 3rd party CIL testsreported today show just how high grade our Cascavel ore and tailings are (at least from 31 tonnes of bulksamples).

Why we have not been able to translate that into good monthly production numbers in the last6 months is now clearer since Gell Street’s visit and the CIL tests.

Our apples to apples test with the CILand our own gravity circuit showed that the current configuration achieves recoveries of less than 40%.

We feel more confident now to process our high-grade tailings through the optimised mill and will run theplant on two shifts going forward batching high grade and tailings separately.

Our Chief Operating Officer, Richard Crew commented ‘I am happy that Peter Richards from Gell StreetMining has joined the team as an expert consultant on the gravity mill and we hope his optimisationprogramme that he completed over the last 2 weeks will allow Cascavel to show its potential as a highgrade mine which our CIL results today show.’

Very comprehensive report inclusive of all aspects of CIL evaluation processing .

Rare indeed to see a more detailed evaluation than this.

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